Among the important roles of Bank Indonesia was to
safeguard and stabilize exchange rate value of Rupiah against other currencies
especially the USD. In this case the focus of effort was on stabilizing
exchange rate value not on strengthening the value. As known extreme weakening
or strengthening of currency value was undesirable to the nation’s economy.
It seemed reasonable that when Rupiah got over-volatile
or over fluctuative, players of economy would panic; they were expecting Bank
Indonesia to immediately take action to neutralize the market and bring back
Rupiah stability. The same was expected by players of economy today as pressure
on Rupiah mounted, especially due to external pressures like the crisis in
Europe.
Continual weakening of Rupiah over year end had actually
kept BI busy. Market intervention by monetary authorities seemed not so
satisfactory, apparently BI had not been successful in taking Rupiah out of the
depth in spite of massive effort by BI to throw vast amount of USD to the
market which drained Indonesia’s forex reserves.
Understandable because BI’s intervention at the
moneymarket last May had washed out at least USD 2 to 3 billion. The result was
unsatisfactory because Rupiah refused to budge significantly. It strengthened
for a while, but sank again dramatically.
As guardian of Rupiah, BI did not have much choice but to
make market intervention. Although guardians of the Central Bank stated that
they had several options to protect Rupiah, but intervention was still the only
reliable and effective means to stabilize Rupiah value against USD.
All in all, forex reserves could not be maintained to be
plentiful. Indonesia’s forex reserves by end of May 2012 dropped significantly
compared to April 2012. Not less than USD 4.9 billion of Indonesia’s forex
reserves had to be released in May 2012. Normally forex reserves showed a trend
of up and down all through the year, but lately fast downturning was inevitable
due to BI’s intervention.
Indonesia’s forex reserves in 2012 was on January posted
at USD 112 billion, February USD 112 billion, March USD 110,49 billion, April
USD 116.4 billion, while in May was posted at USD 111,53 billion.
Analysts,
economists and market players believed that BI must interfere the market
players believed that BI must interfere the market to prevent Rupiah from
sinking any deeper. Unfortunately intervention was never effective to bring
Rupiah up to below Rp 9,000,- Rp 9,300 per USD due to the forceful negative
sentiment of the global market.
BI’s
aggressiveness in controlling Rupiah was out powered by the impact of Europe’s
crisis which triggered dong anxiety. So strengthening of Rupiah toward long
anxiety. So strengthening of Rupiah toward stabilization remained to be BI’s
task today although the cost for it was not small. Let there be no
misinterpretation, whatever the cost to stabilize Rupiah it had nothing to do
with appraisal of BI’s performance because to stabilize Rupiah value was of
paramount importance; the cost might be over ruled as of secondary importance.
Certainly BI would not act carelessly to protect the moneymarket from speculators.
All
stakeholders should just as optimistic and believe that whatever extent BI
would stay strong to uphold Rupiah. This was because BI had exercised term
deposits policy for foreign currency in accordance with market mechanism.
Bi
had also run the policy to make it mandatory for national exporters to place
their proceed from export revenues forex (DHE) to national Bank accounts
instead of foreign banks abroad. This new BI policy should have been put in
effect early June last. It was believed that BI’s policy would strengthen USD
liquidity at home in Indonesia to fulful market demand.
Even
if the crisis in Europe continued and influenced Rupiah value, BI still had the
energy to uphold Rupiah. Stakeholders were pled not to be skeptical not to
mention apathetic about the magnitude of BI’s fund to stabilize Rupiah. The
position of forex reserves was still sufficient for taking action in case
Rupiah suddenly nose dived.
Intervention by BI must be
continued, not to fight against the market which was tremendously big, but to
signal to stakeholders that BI was always standing by at the market. When BI
supported Rupiah, domestic investors would be at ease and unrest in the
domestic moneymarket could be prevented.
Business News - June 15, 2012
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